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Future of the US Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 - Product Image

Future of the US Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018

  • Published: September 2013
  • Region: United States
  • 231 Pages
  • Strategic Defence Intelligence
The US’ Efforts to Retain Military Superiority Will Drive Defense Expenditure to 2018

FEATURED COMPANIES

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"This report is the result of extensive market and company research covering the US defense industry, and provides detailed analysis of both historic and forecast defense industry values including key growth stimulators, analysis of the leading companies in the industry, and key news.

Why was the report written?

The Future of the US Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 offers the reader an insight into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the US defense industry.

What makes this report unique and essential to read?

The Future of the US Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 provides detailed analysis of the current industry size and growth expectations from 2014 to 2018, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides a detailed understanding of emerging opportunities in specific areas.

Who Should Buy This Report

- Defense Companies
- Suppliers to Defense companies
- Defense researchers
- READ MORE >

1 Introduction
1.1. What is this Report bout?
1.2. Definitions
1.3. Summary Methodology
1.4. SDI Terrorism Index
1.5. About Strategic Defence Intelligence

2 Executive Summary

3 Market Attractiveness and Emerging Opportunities
3.1. Defense Market Size Historical and Forecast
3.1.1. US defense expenditure estimated to increase at a CAGR of 1.93% over the forecast period
3.1.2. Rebalancing of Asia- Pacific, turbulent Middle East, modernization and replacement of obsolete equipment, are expected to drive defense spending
3.1.3. Defense expenditure as a percentage of GDP expected to drop over the forecast period
3.1.4. Per capita defense spending forecast to decline over the forecast period
3.2. Analysis of Defense Budget Allocation
3.2.1. Total DoD budget forecasted to decline at a CAGR of -0.38%
3.2.2. Share of Revenue expenditure expected to increase over the forecast period
3.2.3. Budget allocation for Navy to remain dominant over the forecast period
3.2.4. Revenue expenditure allocation for the army expected to increase over the forecast period
3.2.5. Naval defense budget expected to grow at a CAGR of 2.18% over forecast period
3.2.6. The US expected to spend US$765.1 billion on its air force over the forecast period
3.2.7. Expenditure on the defense-wide category of armed forces projected to grow at a CAGR of 2.26% over the forecast period
3.3. Homeland Security Market Size and Forecast
3.3.1. The US homeland security expenditure to reach US$65.3 billion by 2018
3.3.2. Preventing terrorism, securing and managing borders, and safeguarding cyberspace to drive homeland security expenditure over the forecast period
3.3.3. The nation is at “some risk” of terrorism
3.3.4. The US has a terrorism index score of 0.02
3.4. Benchmarking with Key Global Markets
3.4.1. The US will dominate global military spending over the forecast period
3.4.2. US defense budget is much higher than other leading spenders
3.4.3. US defense expenditure as a percentage of GDP is the third-highest in the world
3.4.4. US was largest global arms exporter during 2008-2012
3.4.5. The US emerged as eighth-largest global arms importer during 2008-2012
3.4.6. The US faces some threat from foreign terrorist organizations
3.5. Market Opportunities: Key Trends and Growth Stimulators
3.5.1. Fighters and Multi-role Aircraft
3.5.2. Force Management
3.5.3. Networking/Information Management:
3.5.4. Cyber Security
3.5.5. Software Infrastructure
3.5.6. Space Warfare Systems
3.5.7. Multi-Role Aircraft MRO
3.5.8. Border Security
3.5.9. Maritime Security

4 Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. US primarily imports defense equipment to build strategic relations
4.1.2. Defense imports grew at a CAGR of 10.1% during 2008-2012
4.1.3. The UK supplies the majority of US defense imports
4.1.4. Aircraft account for majority of arms imports
4.2. Export Market Dynamics
4.2.1. US arms exports are driven by political and economic factors
4.2.2. Arms exports expected to increase in the period 2013-2018
4.2.3. US defense exports to increase during the forecast period
4.2.4. Aircraft are the most exported defense good
4.2.5. The US maintains controlled defense export policy

5 Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining power of Supplier: Medium to low
5.1.2. Bargaining power of Buyer: High
5.1.3. Barrier to entry: Medium
5.1.4. Intensity of rivalry: Low to high
5.1.5. Threat of Substitution: Low to high

6 Market Entry Strategy
6.1. Market Regulation
6.1.1. The US defense industry is open to FDI
6.1.2. No offset policy exists in the US
6.1.3. US arms trade is heavily regulated
6.2. Market Entry Route
6.2.1. Foreign OEMs enter the market through the acquisition of domestic defense companies
6.2.2. Joint product development programs, an attractive market entry route
6.2.3. Formation of partnerships with domestic defense firms provide good market entry opportunities
6.2.4. Direct sale of defense equipment provides foreign OEMs with an opportunity to enter the market
6.3. Key Challenges
6.3.1. Sequestration and budget cuts
6.3.2. Decreasing economies of scale and defense inflation
6.3.3. Declining profit margins deter growth of domestic defense companies

7 Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.2. Domestic Public Companies
7.2.1. Lockheed Martin Corp.: overview
7.2.2. Lockheed Martin Corp.: products and services
7.2.3. Lockheed Martin Corp.: recent announcements and strategic initiatives
7.2.4. Lockheed Martin Corp.: alliances
7.2.5. Lockheed Martin Corp.: recent contract wins
7.2.6. Lockheed Martin Corp.: financial analysis
7.2.7. Raytheon: overview
7.2.8. Raytheon: products and services
7.2.9. Raytheon: recent announcements and strategic initiatives
7.2.10. Raytheon: alliances
7.2.11. Raytheon: recent contract wins
7.2.12. Raytheon: financial analysis
7.2.13. General Dynamics: overview
7.2.14. General Dynamics: products and services
7.2.15. General Dynamics: recent announcements and strategic initiatives
7.2.16. General Dynamics: alliances
7.2.17. General Dynamics: recent contract wins
7.2.18. General Dynamics: financial analysis
7.2.19. Boeing: overview
7.2.20. Boeing: products and services
7.2.21. Boeing: recent announcements and strategic initiatives
7.2.22. Boeing: alliances
7.2.23. Boeing: recent contract wins
7.2.24. Boeing: financial analysis
7.2.25. L-3 Communications Corp.: overview
7.2.26. L-3 Communications Corp.: products and services
7.2.27. L-3 Communications Corp.: recent announcements and strategic initiatives
7.2.28. L-3 Communications Corp.: alliances
7.2.29. L-3 Communications Corp.: recent contract wins
7.2.30. L-3 Communications Corp.: financial analysis
7.2.31. Northrop Grumman Corp.: overview
7.2.32. Northrop Grumman Corp.: products and services
7.2.33. Northrop Grumman Corp.: recent contracts and strategic initiatives
7.2.34. Northrop Grumman Corporation: alliances
7.2.35. Northrop Grumman Corp.: recent contract wins
7.2.36. Northrop Grumman Corp.: financial analysis
7.2.37. Science Application International Corp. (SAIC): overview
7.2.38. Science Application International Corp. (SAIC): products and services
7.2.39. Science Application International Corp. (SAIC): recent contracts and strategic initiatives
7.2.40. Science Application International Corp. (SAIC): alliances
7.2.41. Science Application International Corp. (SAIC): recent contract wins
7.2.42. Science Application International Corp. (SAIC): financial analysis
7.2.43. Honeywell International Inc.: overview
7.2.44. Honeywell International Inc.: products and services
7.2.45. Honeywell International Inc.: recent announcements and strategic initiatives
7.2.46. Honeywell International Inc.: alliances
7.2.47. Honeywell International Inc.: recent contract wins
7.2.48. Honeywell International Inc.: financial analysis
7.3. Domestic Private Companies
7.3.1. Sikorsky Aircraft: overview
7.3.2. Sikorsky Aircraft: products and services
7.3.3. Sikorsky Aircraft: recent announcements and strategic initiatives
7.3.4. Sikorsky Aircraft: alliances
7.3.5. Sikorsky Aircraft: recent contract wins
7.3.6. General Electric Aviation: overview
7.3.7. General Electric Aviation: products and services
7.3.8. General Electric Aviation: recent contracts and strategic initiatives
7.3.9. General Electric Aviation: alliances
7.3.10. General Electric Aviation: recent contract wins
7.3.11. Bell Helicopter Textron, Inc.: overview
7.3.12. Bell Helicopter Textron, Inc.: products and services
7.3.13. Bell Helicopter Textron, Inc.: recent announcements and strategic initiatives
7.3.14. Bell Helicopter Textron, Inc.: alliances
7.3.15. Bell Helicopter Textron, Inc.: recent contract wins
7.3.16. Textron Marine and Land Systems: overview
7.3.17. Textron Marine and Land Systems: products and services
7.3.18. Textron Marine and Land Systems: recent announcements and strategic initiatives
7.3.19. Textron Marine and Land Systems: alliances
7.3.20. Textron Marine and Land Systems: recent contract wins

8 Business Environment and Country Risk
8.1. Demographics and Social Statistics
8.1.1. Total Rural Population
8.1.2. Total Urban Population
8.1.3. Number of households
8.2. Economic Performance
8.2.1. GDP Per Capita
8.2.2. GDP, Current Prices
8.2.3. Consumer Price Index
8.2.4. Wholesale Price Index
8.2.5. Local Currency Unit per Euro
8.2.6. Lending Rate
8.2.7. Real Interest Rate
8.2.8. Market Capitalization of Listed Companies
8.2.9. Market Capitalization of Listed Companies (% of GDP)
8.2.10. Government Cash Surplus/Deficit
8.2.11. Government Cash Surplus/Deficit as % of GDP
8.2.12. Central Government Debt
8.2.13. Central Government Debt as % of GDP
8.2.14. Goods exports as % of GDP
8.2.15. Goods imports as % of GDP
8.2.16. Goods Trade Surplus/Deficit as % of GDP
8.2.17. Service Imports as % of GDP
8.2.18. Service Exports as % of GDP
8.2.19. Service Trade Surplus/Deficit as % of GDP
8.2.20. Foreign Direct Investment
8.2.21. Net foreign direct investment as % of GDP
8.2.22. International reserves, including gold
8.3. Energy and Utilities
8.3.1. Conventional Thermal Electricity Net Generation
8.3.2. Hydroelectricity Net Generation
8.3.3. Nuclear Electricity Net Generation
8.3.4. Conventional Thermal Electricity Installed Capacity
8.3.5. Electricity Exports
8.3.6. Electricity Imports
8.3.7. Proved Natural Gas Reserves
8.3.8. Petroleum Consumption
8.3.9. Crude Oil Proved Reserves
8.3.10. Total Non-Hydro Renewable Electricity Net Generation
8.4. Infrastructure
8.4.1. Rail Lines
8.4.2. Air transport, freight
8.4.3. Overall Construction
8.5. Minerals
8.5.1. Mining, Manufacturing, Utilities Output
8.6. Technology
8.6.1. Research and Development Expenditure
8.6.2. Patents Granted
8.7. Telecommunication
8.7.1. Telephone Lines
8.7.2. Telephone Lines Penetration Rate

9 Appendix
9.1. About SDI
9.2. Disclaimer

List of Tables

Table 1: US Defense Expenditure (US$ Billion), 2009-2013
Table 2: US Defense Expenditure (US$ Billion), 2014-2018
Table 3: US GDP Growth vs. Defense Expenditure Growth vs. Defense Expenditure as Percentage of GDP, 2009-2013
Table 4: US GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP Growth, 2014-2018
Table 5: US Per Capita Defense Expenditure, 2009-2013
Table 6: US Per Capita Defense Expenditure, 2014-2018
Table 7: US Defense Budget Split by Base Budget, OCO, and Other Funds (US$ Billion), 2009-2013
Table 8: US Defense Budget Split by Base Budget, OCO, and Other Funds (US$ Billion), 2009-2013
Table 9: US Defense Budget Split Between Capital and Revenue Expenditure (%), 2009-2013
Table 10: US Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2018
Table 11: US Defense Expenditure Allocation for Army, Air Force, Navy, and Defense-wide (%), 2009-2013
Table 12: US Defense Expenditure Allocation for Army, Air Force, Navy, and Others (%), 2014-2018
Table 13: US Defense Budget Allocation for Army (US$ billion), 2009-2013
Table 14: US Defense Budget Allocation for Army (US$ billion), 2014-2018
Table 15: US Defense Budget Allocation for Navy (US$ billion), 2009-2013
Table 16: US Defense Budget Allocation for Navy (US$ billion), 2014-2018
Table 17: US Defense Budget Allocation for Air Force (US$ billion), 2009-2013
Table 18: US Defense Budget Allocation for Air Force (US$ billion), 2014-2018
Table 19: US Defense Budget Allocation for Other Expenditure(US$ billion), 2009-2013
Table 20: US Defense Budget Allocation for Defense-wide Expenditure (US$ billion), 2014-2018
Table 21: US Homeland Security Expenditure (US$ billion), 2009-2013
Table 22: US Homeland Security Expenditure (US$ billion), 2014-2018
Table 23: Benchmarking with Key Markets - 2009-2013 vs. 2014-2018
Table 24: Top Twenty Global Arms Exporters*, 2008-2012
Table 25: Top Twenty Global Arms Importers*, 2008-2012
Table 26: SDI Terrorism Index
Table 27: Lockheed Martin Corp - product focus
Table 28: Lockheed Martin Corp. - Alliances
Table 29: Lockheed Martin Corp. - Recent Contract Wins
Table 30: Raytheon - Product Focus
Table 31: Raytheon - Alliances
Table 32: Raytheon - Recent Contract Wins
Table 33: General Dynamics - product focus
Table 34: General Dynamics - Alliances
Table 35: General Dynamics - Recent Contract Wins
Table 36: Boeing - product focus
Table 37: Boeing - Alliances
Table 38: Boeing - Recent Contract Wins
Table 39: L-3 Communications Corp. - Product Focus
Table 40: L-3 Communications Corp. - Alliances
Table 41: L-3 Communications Corp. - Recent Contract Wins
Table 42: Northrop Grumman Corp.- Product Focus
Table 43: Northrop Grumman Corporation - Alliances
Table 44: Northrop Grumman Corp. - Recent Contract Wins
Table 45: Science Application International Corp. (SAIC) - Product Focus
Table 46: Science Application International Corp. (SAIC) - Alliances
Table 47: Science Application International Corp. (SAIC) - Recent Contract Wins
Table 48: Honeywell International Inc. - product focus
Table 49: Honeywell International Inc. - Alliances
Table 50: Honeywell International Inc.- Recent Contract Wins
Table 51: Sikorsky Aircraft - Product Focus
Table 52: Sikorsky Aircraft - Alliances
Table 53: Sikorsky Aircraft - Recent Contract Wins
Table 54: General Electric Aviation - Product Focus
Table 55: General Electric Aviation - Alliances
Table 56: General Electric Aviation - Recent Contract Wins
Table 57: Bell Helicopter Textron, Inc. - Product Focus
Table 58: Bell Helicopter Textron, Inc. - Alliances
Table 59: Bell Helicopter Textron, Inc. - Recent Contract Wins
Table 60: Textron Marine and Land Systems - Product Focus
Table 61: Textron Marine and Land Systems - Alliances
Table 62: Textron Marine and Land Systems - Recent Contract Wins

List of Figures

Figure 1: US Defense Expenditure (US$ Billion), 2009-2013
Figure 2: US Defense Expenditure (US$ Billion), 2014-2018
Figure 3: US GDP Growth vs. Defense Expenditure Growth vs. Defense Expenditure as Percentage of GDP, 2009-2013
Figure 4: US GDP Growth vs. Defense Expenditure Growth and Defense Expenditure as Percentage of GDP, 2014-2018
Figure 5: US Per Capita Defense Expenditure, 2009-2013
Figure 6: US Per Capita Defense Expenditure, 2014-2018
Figure 7:US Defense Budget Split by Base Budget, OCO, and Other Funds (US$ Billion), 2009-2013
Figure 8: US Defense Budget Split by Base Budget, OCO, and Other Funds (US$ Billion), 2014-2018
Figure 9: US Defense Budget Split Between Capital and Revenue Expenditure (%), 2009-2013
Figure 10: US Defense Budget Split Between Capital and Revenue Expenditure (%), 2014-2018
Figure 11: US Defense Expenditure Allocation for Army, Air Force, Navy, and Defense-wide (%), 2009-2013
Figure 12:US Defense Expenditure Allocation for Army, Air Force, Navy, and Others (%), 2014-2018
Figure 13: US Defense Budget Allocation for Army (US$ billion), 2009-2013
Figure 14: US Defense Budget Allocation for Army (US$ billion), 2014-2018
Figure 15: US Defense Budget Allocation for Navy (US$ billion), 2009-2013
Figure 16: US Defense Budget Allocation for Navy (US$ billion), 2014-2018
Figure 17: US Defense Budget Allocation for Air Force (US$ billion), 2009-2013
Figure 18: US Defense Budget Allocation for Air Force (US$ billion), 2014-2018
Figure 19: US Defense Budget Allocation for Defense-wide Expenditure (US$ billion),
Figure 20: US Defense Budget Allocation for Defense-wide Expenditure (US$ billion),
Figure 21: US Homeland Security Expenditure (US$ billion), 2009-2013
Figure 22: US Homeland Security Expenditure (US$ billion), 2014-2018
Figure 23: SDI Terrorism Heat Map, 2013
Figure 24: SDI Terrorism Index, 2013
Figure 25: Benchmarking with Key Markets - 2009-2013 vs. 2014-2018
Figure 26: Defense Expenditure of the World's Largest Military Spenders (US$ Billion), 2013 and 2018
Figure 27: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2013
Figure 28: Fighters and Multi-role Aircraft Market Size (US$ Billion), 2013-2023
Figure 29: Force Management Market Size (US$ Billion), 2013-2023
Figure 30: Networking/ Information Management Market Size (US$ Billion), 2013-2023
Figure 31: Cyber Security Market Size (US$ Billion), 2013-2023
Figure 32: Software Infrastructure Market Size (US$ Billion), 2013-2023
Figure 33: Space Warfare Systems Market Size (US$ Billion), 2013-2023
Figure 34: Attack and Multi-Role Aircraft MRO Market Size (US$ Billion), 2013-2023
Figure 35: Border Security Market Size (US$ Billion), 2013-2023
Figure 36: Maritime Security Market Size (US$ Billion), 2013-2023
Figure 37: US Defense Import Trend (US$ Million), 2008-2012
Figure 38: US Defense Imports by Country (%),2008-2012
Figure 39: US Defense Imports by Category (%), 2008-2012
Figure 40: US Defense exports (US$ Million),2008-2012
Figure 41: US Defense Exports by Country (%), 2008-2012
Figure 42: US Defense Exports by Category (%),2008-2012
Figure 43: Industry Dynamics - Porter's Five Forces Analysis
Figure 44: Lockheed Martin Corp. - Revenue Trend Analysis (US$ billion), 2008-2012
Figure 45: Lockheed Martin Corp. - Operating Profit Trend Analysis (US$ billion), 2008-2012
Figure 46: Lockheed Martin Corp. - Net Profit Trend Analysis (US$ billion), 2008-2012
Figure 47: Raytheon - Revenue Trend Analysis (US$ billion), 2008-2012
Figure 48: Raytheon - Operating Profit Trend Analysis (US$ billion), 2008-2012
Figure 49: Raytheon - Net Profit Trend Analysis (US$ billion), 2008-2012
Figure 50: General Dynamics - Revenue Trend Analysis (US$ billion), 2008-2012
Figure 51: General Dynamics - Operating Profit Trend Analysis (US$ billion), 2008-2012
Figure 52: General Dynamics - Net Profit Trend Analysis (US$ billion), 2008-2012
Figure 53: Boeing - Revenue Trend Analysis (US$ billion), 2008-2012
Figure 54: Boeing - Operating Profit Trend Analysis (US$ billion), 2008-2012
Figure 55: Boeing - Net Profit Trend Analysis (US$ billion), 2008-2012
Figure 56: L-3 Communications Corp. - Revenue Trend Analysis (US$ billion), 2008-2012
Figure 57: L-3 Communications Corp. - Operating Profit Trend Analysis (US$ billion), 2008-2012
Figure 58: L-3 Communications Corp. - Net Profit Trend Analysis (US$ billion), 2008-2012
Figure 59: Northrop Grumman Corp. - Revenue Trend Analysis (US$ billion), 2008-2012
Figure 60: Northrop Grumman Corp. - Operating Profit Trend Analysis (US$ billion), 2008-2012
Figure 61: Northrop Grumman Corp. - Net Profit Trend Analysis (US$ billion), 2008-2012
Figure 62: Science Application International Corp. (SAIC) - Revenue Trend Analysis (US$ billion), 2009-2013
Figure 63: Science Application International Corp. (SAIC) - Operating Profit Trend Analysis (US$ million), 2009-2013
Figure 64: Science Application International Corp. (SAIC) - Net Profit Trend Analysis (US$ million), 2009-2013
Figure 65: Honeywell International Inc. - Revenue Trend Analysis (US$ billion), 2008-2012
Figure 66: Honeywell International Inc. - Operating Profit Trend Analysis (US$ billion), 2008-2012
Figure 67: Honeywell International Inc. - Net Profit Trend Analysis (US$ billion), 2008-2012
Figure 68: US Rural Population (In Millions), 2008-2017
Figure 69: US Urban Population (In Millions), 2008-2017
Figure 70: US Number of Households (In Millions), 2008-2017
Figure 71: US GDP Per Capita, 2008-2017
Figure 72: US GDP, Current Prices (US$ Billion), 2008-2017
Figure 73: US Consumer Price Index, 2008-2017
Figure 74: US Wholesale Price Index, 2004-2013
Figure 75: Local Currency per Euro, 2008-2017
Figure 76: Lending Rate, 2002-2011
Figure 77: Real Interest Rate, 2002-2011s
Figure 78: US Market Capitalization of Listed Companies (US$ Billion), 2004-2013
Figure 79: US Market Capitalization of Listed Companies (% of GDP), 2004-2013
Figure 80: US Government Cash Surplus/Deficit (LCU Billion), 2002-2011
Figure 81: US Government Cash Surplus/Deficit as % of GDP, 2002-2011
Figure 82: US Central Government Debt (LCU Bn), 2002-2011
Figure 83: US Central Government Debt as % of GDP, 2002-2011
Figure 84: US Goods Exports as % of GDP, 2004-2013
Figure 85: US Goods Imports as % of GDP, 2004-2013
Figure 86: US Goods Trade Surplus/Deficit as % of GDP, 2004-2013
Figure 87: US Service Imports as % of GDP, 2004-2013
Figure 88: US Service Exports as % of GDP, 2004-2013
Figure 89: US Service Trade Surplus/Deficit as % of GDP, 2004-2013
Figure 90: US Foreign Direct Investment (US$ Billion), 2002-2011
Figure 91: US Net foreign direct investment as % of GDP, 2004-2013
Figure 92: US International reserves, including gold (US$ Billion), 2004-2013
Figure 93: US Conventional Thermal Electricity Net Generation (Billion Kilowatt hours), 2003-2012
Figure 94: US Hydroelectricity Net Generation (Billion Kilowatt hours), 2002-2011
Figure 95: US Nuclear Electricity Net Generation (Billion Kilowatt hours), 2002-2011
Figure 96: US Conventional Thermal Electricity Installed Capacity (Million Kilowatts), 2001-2010
Figure 97: US Electricity Exports (Billion Kilowatt hours), 2002-2011
Figure 98: US Electricity Imports (Billion Kilowatt hours), 2002-2011
Figure 99: US Proved Natural Gas Reserves (Trillion Cubic Feet), 2002-2011
Figure 100: US Petroleum Consumption (Thousand Barrels Per Day), 2004-2013
Figure 101: US Crude Oil Proved Reserves (Billion Barrels), 2002-2011
Figure 102: US Total Non-Hydro Renewable Electricity Net Generation (Billion Kilowatts), 2002-2011
Figure 103: US Rail Lines (kms), 2003-2012
Figure 104: US Air transport freight (million ton-km), 2002-2011
Figure 105: US Overall Construction (US$ Billion), 2008-2017
Figure 106: US Mining, Manufacturing, Utilities Output (US$ Billion), 2003-2012
Figure 107: US Research and Development Expenditure, 2001-2010
Figure 108: US Patents Granted, 2004-2013
Figure 109: US Telephone Lines (In Million), 2003-2012
Figure 110: US Telephone Lines Penetration Rate (Per 100 People), 2004-2013

Key Highlights of the Report

Growing might of Chinese military and its assertiveness in regional disputes in the recent years have grabbed the attention of the US. The US considers China to possess the capability of affecting its superpower status both economically and militarily. Chinese investments in fifth generation aircraft, cyber warfare, anti-aircraft and anti-ship weaponry, aircraft carriers, submarines, and ballistic missiles pose a potential threat to US power projection capabilities in the Pacific. Another potential threat for the US is North Korea, which is perceived to be trying to achieve nuclear capability. The country also believes that North Korea is actively pursuing the development of thermonuclear weapons such as hydrogen bombs in which plutonium and uranium are combined for a higher energy yield.

Following the 9/11 attacks, the US reorganized and integrated its federal agencies and created the Department of Homeland Security (DHS) for the purpose of building a strengthened homeland security enterprise and to be equipped to counter a range of threats. The DHS's expenditure is expected to driven by the mission areas such as preventing terrorism and enhancing security, securing and managing its borders, and safeguarding and securing Cyberspace. Preventing Terrorism and enhancing security: DHS's top priority mission area is preventing terrorism on its land and enhancing the security. DHS's counterterrorism responsibilities focus on preventing the unauthorized acquisition, importation, movement, or use of chemical, biological, radiological, and nuclear materials and capabilities within the United States; and reducing the vulnerability of critical U.S. infrastructure and key resources, essential leadership, and major events to terrorist attacks and other hazards. Recent Boston Marathon bombings have re-imposed the need of counter terrorism measures and the country is expected increase fund allocations for this purpose.

The US has a highly developed defense industry that is capable of fulfilling the majority of domestic military requirements, and the nation is also the largest global exporter of defense equipment due to its highly advanced defense industrial base. Despite this, the US has become increasingly open to importing arms goods from foreign defense equipment suppliers in the UK and Canada, and consequently, arms imports registered a steady increase during the review period; the majority of imports consist of subsystems and components for aircraft and armored vehicles. Although global military expenditure registered a decline in 2009 due to the global economic slowdown, US defense exports continued to grow that year; the largest consumers of US defense goods during 2008-2012 were South Korea, Australia, and the UAE. While the country exports all types of defense equipment, the majority consists of fighter aircraft, missile defense systems, armored vehicles, engines, and sensors.

Key Defense Drivers

Rebalancing of Asia-Pacific:

The growing might of the Chinese military and its assertiveness in regional disputes have grabbed the attention of the US in recent years, with Chinese investment in fifth generation aircraft, cyber warfare technologies, anti-aircraft and anti-ship weaponry, aircraft carriers, submarines and ballistic missiles all undermining the US' power projection capabilities in the Pacific, and adding fuel to the fire of its increasingly wary stance towards Asia's superpower.

Another potential threat to the US in the region is North Korea, which is perceived as trying to achieve nuclear capabilities through the development of thermonuclear weapons such as hydrogen bombs in which plutonium and uranium are combined for higher energy yield.
In view of these perceived threats, the US' new strategy is to increase its military presence in Asia Pacific, and announced plans to shift approximately 60% of its warships to the region by 2020. Strategic Defence Intelligence also predicts that it will strengthen its military bases in Japan, South Korea, Taiwan, Philippines, Cambodia, Thailand, Brunei, Malaysia, and Singapore, in addition to deploying 14 ground based interceptors in Alaska to counter the threat from any nuclear weapon or missile programs from North Korea.

Turbulent Middle East:

Civil unrest in the Middle East is watched closely by the US, as the developments in these countries have a direct impact on terrorist threats. Uncertainty in Egypt and Syria, coupled with arms proliferation in Lebanon and other Middle Eastern countries could pose a potential threat to the US.

The US' primary concern is with the proliferation of ballistic missiles and weapons of mass destruction in the region, which help terrorist organizations such as Al-Qaida and Hezbollah. In addition, Iran continues to develop its nuclear capabilities with the perceived goal of producing sufficient weapon-grade uranium for a nuclear attack, with intentions to do so by mid-2014. Whilst Iran lacks the long distance missile capabilities to deliver such a payload to American shores, the US expects Iran to use missiles to attack Israel and other US allies in the Middle East.

Consequently, to counter the threat from Iran, the US is encouraging GCC (Gulf Cooperation Council) countries to develop and deploy missile defense systems, and over the next decade, the US is expected to field 30 ground based interceptors in the US and its allies.

Retention of Military Supremacy:

Since the end of the Cold War in 1991, the US has been the globe's undoubted military superpower. However, as Chinese and Russian defense expenditure has risen significantly in recent years, the US is keen to take steps to preserve its superiority. Indeed, whilst China is developing a new-generation intercontinental ballistic missile (ICBM) capable of destroying targets all over the world, Russia is also developing a heavy-liquid-fuel, non-nuclear, precision-guided payload capability for a new class of ICBMs, which would give Russia near-global coverage.

Consequently, the US is embarking on a nuclear defense modernization plan and missile defense program that is expected to have a positive driving effect on defense expenditure; additionally, the country is seeking to enhance its command, control, computers, communications, and intelligence systems to increase inter-operability between the various branches of the armed forces.

The US' drive to retain its global military superiority, and more generally its prominent place on the world stage as the pre-eminent superpower, will act as major drivers on defense expenditure to 2018

- Bell Helicopter Textron
- Boeing
- General Dynamics
- General Electric (GE) Aviation
- Honeywell
- Inc
- International Inc
- L-3 Communications Corp
- Lockheed Martin
- Northrop Grumman Corp
- Raytheon
- Science Application International Corp. (SAIC)
- Sikorsky Aircraft
- Textron Marine and Land Systems

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